Advanced Television - The Death of Salesmen?

Willy Loman Gets Done In By His TV

The retailing system of Today is based on a poor communications network and geographic sensitivity.

Introduction

With this article space, I hope to add a different view on Digital Television, specifically Advanced
Television, Video on Demand and software driven, distributed DTV services.
Since 21st also addresses
cross-industry issues within the Digital Television community, I will write under the premise that our
readers have at least a basic knowledge of High Definition Television, Advanced Television Services, and
distributed networks. If you feel that you're a bit behind in these areas,
E-mail me and I will put something together to bring you up to speed.

I work for a company called Digital Planet, which designs distributed software applications for the
Advanced Television Services (ATS) market. It is our belief that ATS and High Definition Television can
enjoy the same audience as one can greatly enhance the other. Our concentration is in examination and
reconstruction of business models to fit the new millennium of distributed communications. This is the first
installment of a collection of articles discussing different aspects of ATS and it's affect on corporate
America and the consuming public.

ATS and it's
affects on consumer markets

The telecommunications industry is spending a combined $300 Billion on infrastructure to support Advanced
Television Services and Data transmission. With this continual investment, and growing companies like
Qwest installing Fiber all over the world, we are currently utilizing only 5% of America's available Fiber
capacity. Considering the substantial investment in infrastructure, these companies are gearing up for the
ATS marketplace, purchasing Set Top Boxes by the Millions. The Set Top is the consumers gateway to the
new network that will spawn off of this infrastructure and customer base, giving every home access to low
cost, distributed computing power.

It is our belief that initially, Set Top Boxes will exceed HDTV sets in acceptance due to their low cost and
high potential returns. This belief is shared by companies like Microsoft, Sun, Compaq and PC
manufacturers, who almost all have some type of Set Top designs on the table. If the software is designed
well and the service of a distributed ATS network is marketed properly, the potential profit of such a
network far outweighs the costs. Incorporate Moore's law and the declining cost of computer hardware
and in a few years we will see the cable companies offering packages similar to the cellular telephone
industry, whereas the user gets the box for free because it's just too expensive to not have them on the
network.

If such an audience can be generated, which is likely considering the global cross-industry investment, and
outstanding revenue possibilities, it will change the face of retailing forever. Such a system will create
millions of new jobs, while eliminating entire industries in a single sweep. The possibility of a direct
relationship between manufacturers and consumers allows for lower prices, faster delivery and better
quality products. The appeal of such a system to corporate America is just to strong to be ignored.

The first example of this would be Brokers. In America alone, there are millions of people who make a living
connecting buyer with suppliers. From stocks and commodities to consumer products and services, brokers
are an integral part of our global economic system. Their major value in the distribution process is not
their ability to sell, but the contacts of whom they sell to. When such information is available in a
centralized, indexed, categorized, continually updated database, the need for brokers is virtually
eliminated.

On the retail side,
companies will have to restructure their business models to suit the new age.
Media companies like Blockbuster and Hollywood Video are the most affected by
this revolution. Blockbuster
Video, a company that has over $4 Billion in annual revenues, claims to have
a retail location within a 10 minute drive of every major populated area in America.
It employs over 80,000 people in it's 4,438
retail locations (July 1998).

Telecommunication service providers including Satellite, MMDS and Cable have all announced a desire or
intent to provide Video on Demand services within the next 5-10 years. Since Blockbuster's agreements
with their suppliers are based on a system of profit sharing and are obviously not exclusive, this means
that with the correct software, your local cable provider could become a digital video rental store. As a
result, the consumer can get the same video they get at Blockbuster delivered directly to their TV, with all
the functionality of a VCR, at less than 1/4 the cost. With an offer like this, who would be getting into
their car to drive to the video store? For that matter, Who needs a VCR?

The economics
of an event like this are astounding. With "Beyond Critical Mass" penetration of ATS in
the market, a company like Blockbuster could lose their advantage of availability and name recognition to a
system that is more efficient, user friendly, less expensive and very well funded. The cable company's
cost for video distribution doesn't include the overhead of Blockbuster's new $10 Million duplication and
distribution center, blank media costs, trucking, retail overhead and human resources. This allows the
cable company to price Blockbuster out of the market. After witnessing Sumner Redstone from Viacom's
"Iâll Believe it when I see it" public statements, I can see this happening in
the near future.

The above example is extreme, but ATS will have an influence on every company that deals with a
customer base. Although people like to shop, the concept of shopping is obsolete. The customer still likes
to browse, and will always want to touch a tangible item before buying, but the decision process of what to
buy and where to get it will be greatly affected. For example, why do I need to be surrounded by 75
different car dealerships within a 30 minute drive of my house? Are there 75 different car
manufacturers? Of course not. Yet every time I want to buy a car, I have to go dealer to dealer to find
the right color, features and price. Add on the frustration of being lied to and a greedy salesmen who just
want a fat commission, and you have the American car buying experience in a nutshell.

When I want to buy a car, I have a general idea of what kind of car I want. I don't want a Saturn because
it's too small and slow, Mercedes is too expensive, and I don't like trucks. I keep seeing a nice car on the
road and decide that I am interested in that car. The first step is the investigative process where I gather
information on the vehicle, turning to my ATS set top for the new cars section.

I don't know the name of the car, but I can match up the picture from a database of new cars. The system
can satisfy my request be giving me all of the specific information on the car that would be critical to my
decision, more than likely provided by Consumer Reports or some similar organization for a small fee. I
then compare this car to all other cars in the same class/price range and decide which one I want. I then
send a request directly to the manufacturer and set up an appointment to see the car.

Since the average consumer buys a car every couple of years, it's not too much to ask a consumer to drive
30-45 minutes to the central Ford warehouse to see the exact car they've selected on screen. It's one
Stop Shopping. Especially if it's going to save them $3,000-$5,000 from conventional buying practices. If
it is profitable to the manufacturer, special arrangements can be made to deliver a test drive directly to
the consumer. This eliminates the problem of my last car buying experience where the dealer told me that
there was no car fitting my description in New York State, when the dealer five miles away had the exact
car I wanted. It eliminates commission salespeople, dealer overhead and allows consumers to respond
directly to the factory, allowing them to improve upon their products more quickly.

Customer relations can be enhanced by building a car support section within the companies corporate online
entity. Information from how to set the clock to what size wiper blades should all be made easily
accessible. A system can be put in place to effectively deliver personal service to every individual who
has purchased a car, increasing the possibility that that person will return to buy again.

The concept of ATS and it's effect shouldn't be seen as the destruction of industries, but growing pains for a
technologically evolving society. Just as in the past with the introduction of electricity, or the horseless
carriage, the public evolved into a new age where the benefits far outweigh the losses. There aren't as
many Blacksmiths' around as there were in the early 1900's, but the invention of the car could be
considered an enhancement on modern life. Distributed Television will eliminate many of the repetitive
jobs and replace them with more challenging employment. This new breed of job offerings will require a
more educated society which might not be a bad thing after all.

We have only scratched the surface of what we can do with ATS in redesigning corporate business models
and I look forward to the next installment. Blessings of better customer service, lower cost of living and
the elimination of Voice Mail are only the beginning of the revolution. The days of price gauging, per minute
long distance and the middle man are about to end. Are you ready?